Bob Lyons reports on TRS fiscal health. John Dillon responds with Alice.

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The final numbers for the size of our fund at end of Fiscal Year 2020 will likely not be available until sometime in September. What the fund may have made or lost in equities and our investments in bonds is known on a daily basis, but our wealth in real estate and private equities for the year take much longer to be determined.

TRS on December 31, 2019 had $54.24 billionand in mid-February that number started down with the pandemic taking its toll on the markets.The end of May the unofficial working number for TRS was $50.5 billion in the fund. I retired in 1994 and that same year the Illinois General Assembly passed that state’s plan to improve the funding for Illinois’ five pension funds.When the plan went into effect the next year TRS was 50% funded and the unfunded obligation for TRS was $15 billion.

The plan to improve the funding has now had twenty-five years to move toward the goal of achieving 90% funding by 2045, so we should be halfway there.We are not. There was a moment at the end of June, 2000 that even though the fund had started down with the dotcom bubble having burst that we were still at our all-time high of 68%. Our low was 38% at the nadir of the Great Recession just eleven years ago.  At the middle of FY 2020  the unfunded pension obligation had moved from $76 billion to $78 billion and my quite unofficial estimate is we are now hovering at about 40%.

We are still receiving our monthly checks, but our target of 90% funding is still a long way off.

-Bob Lyons
………………………..
John Dillon responds with a quote from Alice in Wonderland.
“Well, in our country,” said Alicestill panting a little, “you’d generally get to somewhere else—if you run very fast for a long time, as we’ve been doing.” “A slow sort of country!” said the Red Queen. “Now, here, you see, it takes all the running you can do, to keep in the same place.”

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